Third Circuit Revisits Ascertainability Yet Again: Affidavits Plus Objective Records May Suffice
How do you know who’s in a class? Under the Third Circuit’s ascertainability standard – which the court has found to be inherent in Rule 23 – that determination requires a clear class definition and a reliable and administratively feasible means of determining whether the putative class member falls within that definition. But what is "reliable and administratively feasible"? The Third Circuit addressed those questions in City Select Auto Sales, Inc. v. BMW Bank of North America, Inc., Case No. 15-3931 (3d Cir. Aug. 16, 2017).
BMW Bank provided financing to consumers through independent car dealers for all makes and models of vehicles. In 2012, BMW Bank entered into an agreement with CreditSmarts to offer loans through the CreditSmarts network. CreditSmarts, in turn, hired a fax broadcaster, WestFax, Inc., to fax advertisements to independent car dealers. In November and December 2012, WestFax transmitted almost 21,000 marketing faxes on behalf of BMW Bank. One of those faxes went to plaintiff City Select, which filed a class-action lawsuit for violation of the Telephone Consumer Protection Act, alleging that the fax was unsolicited. City Select proposed a class consisting of
All auto dealerships that were included in the Creditsmarts database on or before December 27, 2012, with fax numbers identified in the database who were sent one or more telephone facsimile messages between November 20, 2012 and January 1, 2013, that advertised the commercial availability of property, goods or services offered by "BMW Bank of North America."
Significantly, in order to develop the fax list, WestFax used CreditSmarts’s customer database, which sometimes – but not always – contained dealer fax numbers. WestFax generated a recipient list from that database, and then sent the faxes. Neither WestFax nor CreditSmarts retained the recipient list. City Select sought production of CreditSmarts’s customer database, arguing that class members could be identified based on customers in CreditSmarts’s database on or before December 2012. The magistrate judge, however, denied City Select’s motion to compel.
The District Court denied City Select’s motion for class certification, finding that there was no reliable or administratively feasible method to determine whether putative class members fell within the class definition. The court concluded that "even though Plaintiff may be able to identify the potential universe of fax recipients, there is no objective way of determining which customers were actually sent the BMW fax."
The Third Circuit reversed the decision. The Court reviewed its prior decisions on ascertainability – Marcus v. BMW of N. Am. LLC, Carrera v. Bayer Corp., Hayes v. Wal-Mart Stores, Inc., and Byrd v. Aaron’s Inc. – noting its precedent that a Rule 23(b)(3) class must be "currently and readily ascertainable based on objective criteria" means that a "plaintiff must show that (1) the class is defined with reference to objective criteria; and (2) there is a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition." Importantly, the Court noted that a plaintiff need not "be able to identify all class members at class certification—instead, a plaintiff need only show that class members can be identified."
And that, according to the Court of Appeals, is where the District Court had erred. City Select had proposed that potential class members could be identified using CreditSmarts’s customer database, by identifying customers in the database prior to December 2012 that also had a fax number. While CreditSmarts asserted that such a group might be over-inclusive – because the faxes may have gone to a smaller subset of that group – City Select argued that from that larger group, potential class members could submit affidavits confirming their receipt of the fax. The Third Circuit agreed, vacated the order denying class certification, and remanded the case for two reasons.
First, our ascertainability precedents do not categorically preclude affidavits from potential class members, in combination with the CreditSmarts database, from satisfying the ascertainability standard. Second, because the CreditSmarts database was not produced during discovery, plaintiff was denied the opportunity to demonstrate whether a reliable, administratively feasible method of ascertaining the class exists based, in whole or in part, on that database
The Court clarified that, at the class-certification stage, plaintiffs don’t need to show that one single record or a set of records could conclusively establish class membership. While affidavits alone – without any corroborating records – would not suffice, "Affidavits, in combination with records or other reliable and administratively feasible means, can meet the ascertainability standard." The Court noted that its prior ascertainability decisions did not "imply that no level of inquiry as to the identity of class members can ever be undertaken." The Court took
no position on whether the level of individualized fact-finding in this case is administratively infeasible because we are limited by the record before us, which does not include the CreditSmarts database. The determination whether there is a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition must be tailored to the facts of the particular case.
City Select was denied the opportunity to try to demonstrate that a "reliable and administratively feasible mechanism for identifying putative class members" existed. "On remand, the District Court should consider this evidence in assessing whether the relevant portion of the database coupled with attestations satisfies our ascertainability standard."
In a lengthy concurrence, Judge Fuentes urged the Third Circuit to dispense with its ascertainability jurisprudence, which he argued places an "unnecessary burden on low-value consumer class actions." He noted that the majority of Circuits to consider ascertainability had rejected it, although the issue is the subject of a pending petition before the U.S. Supreme Court. In Judge Fuentes’s view, the articulated rationales for an ascertainability requirement – protecting absent class-members’ opt-out rights and interests; protecting defendants’ due-process rights; and ensuring efficiency – were adequately addressed in Rule 23’s explicit requirements.
Ascertainability remains a controversial topic in class actions. Whether City Select signals a softening of the Third Circuit’s approach to ascertainability in class-certification decisions remains to be seen. But, as the Third Circuit’s ascertainability cases have shown, central to any Rule 23 class-certification decision is whether the plaintiff has demonstrated that common questions of fact or law predominate, and that a class action is superior to other modes of adjudication to "fairly and efficiently" decide the issues. The term "ascertainability" may go away, but the underlying requirements should not.